In home bread baking business

I don't know how we can answer that for you.  You should know your market better than anonymous bakers from various parts of the world.  What kind of breads do you like baking/eating?  Who is buying your bread?  How much will they pay for a loaf of bread? That's a place to start.  Do you have experience in the baking industry.  Do you know what kind of ovens and mixers you might need?  It would be very difficult to make any sort of serious income off of a home oven.  Are you making pan loaves?  Free form loaves?  Even if you were baking in dutch ovens and could fit 5 or 6 in your oven it would take you probably an hour and 15 minutes to get through a baking cycle and have the oven ready for the next batch...A loaf of sourdough that you may sell for 5 or 5.50 probably has about 1.25 ingredient cost, plus energy costs etc and you're looking at 3 bucks profit per loaf maybe?  So 15 bucks profit per oven load or so and that is before you've "paid" yourself.  If a few loaves don't sell then that becomes overhead.  I don't know what your business plan is here but it's not an easy endeavor making sustainable profit out of a home kitchen without professional equipment.  I know some people do it as side income but I think it fulfills more of a hobby aspect for a lot of them rather than a serious for profit endeavor.

That caveat aside, I think you'd want to start with a basic white sourdough, a whole grain loaf of some sort, and then a specialty loaf (maybe a cheese bread, olive bread, brioche or something like that).  That seems like the logical starting point to me but again, it depends on the clients and what you're capable of making.  My favorite breads are baguettes and ciabattas, but I'm probably not your target customer because I make my own bread and bake bread for a living.

I do not bake for sale nor business.  I enjoy baking a lot and have been playing a lot with different doughs.

First things that come to mind are:  Do you need a license?  In Texas, I'd guess regulations are loose but does health department need to inspect?  Also, how big or how small the loaves that you plan to bake?  Is this an every day thing?  A weekend thing?  A farm market distribution/sale? 

Are you going to do baked goods in addition bread?  Do you have a business plan?  What about taxes?  What are you suppliers?  Do you just go to Costco or other club for flour?  What about salt?  Yeast? Other things that are add on?  Do you plan to do gluten free?

I think it is a tough business to break into with many more questions than answers. 

Breadboy02 is right on target.  You may be required to put in a kitchen that is up to commercial standards and your facility would likely be subject to inspections.  So the first call is probably your state health department.   You sound like you have thought about this for a long time.  I hope things work out for you!  Embth

At least the term "microbakery" is used in the UK - not sure about world wide, but we did start a thread here a few weeks back on it ...

Know your market and know your limits would be my initial advice but start with the boring stuff of knowing what the local laws are and insurance requirements. Fortunately it's straightforward in the UK, but I hear it differers from state to state in the US.

I feel it's tricky to make money as your main source of income from a home-based bakery. However it will depend on how much you make and your overheads, etc. For me the flour is now relatively cheap - it's my time and the cost of energy to fire the ovens that's the main thing, but bread alone won't give me a sustainable income. Right now the bakery is only part-time, but even so, I'm making 150-200 loaves a week which I sell through local community shops and (small) local produce markets. (The big markets all have big bakeries in attendance) Don't forget to deduct the outlets markup from your sales figure - they might want as much as 40% on the price you sell to them at but its a trade-off of your own time to run a stall at a local produce market vs. getting someone else to (effectively) sell them for you...

So unless your making 100 or so a day, I feel that you may need to do more to earn a full-time living - I make cakes and patisserie although the outlets for them is limited. I also make meat pastys and quiche as well as vegetarian empanadas and so on. The best income supplement is teaching, so I run courses on bread making, BBQ cooking, cakes/simple patisserie, etc.

Back to the bread side - only you will know what sells best locally, but this might not work well with your timings - especially if you want to get your bread on-sale before 9am... I got up at 5:30 this morning to make/bake 32 loaves and 2 large cakes, however the dough for the breads was all overnight fermented - some yeast, some sourdough - the dough was mixed/kneaded for them at 8pm last night... So for me its a sort of split-shift thing.

Here's some of what I baked this morning:

These are standard yeasted tin-loaves. the smaller ones are white and the larger ones 100% wholemeal. All over night fermented (I only use a tiny fraction of normal yeast) then scaled/shapes/proofed and baked this morning.

These:

are some of the sourdoughs that I baked this morning. Various types - granary, spelt, etc. (I did a bunch of rye breads too that are not in the photos) again, these are fermented overnight then scaled/shaped/proofed and baked this morning.

Hope this gives you some food for thought!

-Gordon

let me repeat what the others have said:

- Know your market.  Texas is a very big place and its residents have varying tastes.  In your immediate vicinity, what do you see people buying?  Rustic loaves?  Conchas?  Kolaches?  Wonder bread?  

- Know your local regulations and codes.  Talk to your local health department.  Find out what they require before you buy or lease anything.  Once you know the requirements, make whatever changes you must to abide by those requirements. 

- Talk to an accountant and attorney.  Know what your legal obligations are, as well as any liabilities you may be shouldering.  Will you have to create a corporation or LLC to shield yourself?  How do you collect and remit taxes, and to which authorities?

- Learn the business of baking commercially.  See if you can wangle an apprenticeship, even if unpaid, at a bakery to find out whether the dream and the reality can survive contact with each other.  

Best wishes for your endeavor. 

Paul

One of the long time members here -VARDA- has done what you are setting out to do.  

Over the past 5-6 years she has gone from a homemaker to, just recently, having her own commercial bakery from which to work.

 HERE is her most recent entry showing her commercial set up.

You might want to read through her past blogs or contact her via a PM and see if she has any sage wisdom to share.

Good Luck,

Janet

Pretty much everything has already been said here, I think that the points by pmcool should really be taken to heart, Microbakers in the USA should first and foremost have the liability issues taken care of, following that are the health dept. requirements.

Also as mentioned, putting in some time at an established bakery would provide valuable insight into work flow, productivity you could familiarise yourself with commercial equipment and this would help you to put together a plan tailored to your dream. Simply request to hangout in the wee hours of the morning at various bakeries.

I think that the best plan of action, is to imagine what would be the optimal setup, then to take as many steps back as is required to get into the realm of what is practical. Number crunching is a must, many bakeries have trouble just getting by on bread sales alone.

You have to know your market and identify what's missing, there is little point in duplicating what is already readily available, if you can consistently supply a unique high quailty product, you will have a much better chance of making a successful go of it. 

I do the micro thing as a hobby/sideline, 35 loaves twice per week. I have a 20q. meter basement room set up with a hodgepodge of used equipment. My bread is all presold to regular customers, i have a peddle bike&trailer and offer delicious bread delivered with a smile, door to door throughout the village. I'm able to charge a premium price, but in calculating the hourly investment, it's not so attractive. It's all for the love of good bread, if you want to earn decent money, you will have to step well out of the range of microbaking to do it.

I have a site with micro-baker musings-equipment/ bread babble, there might be something of interest for you there:

Joy of gluten

cheers

daniel 

A very common mistake that micro-businesses make is defining their market inappropriately, usually by setting the parameters too broadly. As a simplified hypothetical example, say you find that 95% of people in your planned trading area don't like / won't eat sourdough, which is what you're looking to sell. How relevant that is can depend on various factors.

For instance, if you're looking to sell 50 loaves per week in a trading area where the population is 100 people (i.e. your effective market is 5 potential buyers), you should re-think. But if you're in a far more heavily populated area, especially one where there's little or no SD available, 50 loaves per week may be a much more viable target.

The key is to understand that your core market isn't everyone who eats bread; it's those people who are likely to buy and eat the bread you plan to make. There's absolutely nothing wrong with targeting a small niche market provided it's large enough to support your business and if you accept that it can be difficult to expand beyond the niche. 

Sorry for the late response, so I'm betting you've already found these by now, but a few resources.

State of Texas Department of State Health Services is the regulatory agency over commercial food production generally and also specifically "Cottage Food Operations", which are any commercial food production based out of a home kitchen.  More info is available at https://www.dshs.state.tx.us/foodestablishments/cottagefood/default.aspx.  Also, another website that has a decent FAQ about the state Cottage Food rules is http://texascottagefoodlaw.com/Frequently-Asked-Questions.  

However, some things that are probably important to note from these sources is that there are very different rules and regulations between a Cottage Food operation and a standard commercial kitchen type operation.  A Cottage Food operation is allowed by State Law and not able to be prohibited by local law/ordinance.  However, Cottage Food operations are limited to selling a specific venues only and only direct to consumer, not wholesale, (not to mention other restrictions like specific labeling, $50,000 /yr income maximum, etc ...).  Additionally, Cottage Food operations are limited to only state deemed NON Potentially Hazardous Foods, meaning if you strictly want to do breads, you're fine (except you might want to check on cheese breads and a most foccaccia are out of the question).  However, if you were planning on expanding into pastries and other baked goods, you really need to very carefully look at the regulations and plan your menu accordingly.

On the other hand, if you are planning on expanding at some point to a separate kitchen other than your primary home kitchen, that will potentially change things significantly.  At that point, if you are in a city, you would be subject to all city laws, ordinances, zoning restrictions, inspections, etc...  If you are in city limits (don't know where in TX you are) and only consider this business viable if you can expand at some point on your property, check with the city first, because you may be zoned residential only and therefore you may never be able to get a commercial kitchen licensed without a zoning change which can be a major issue, especially in some communities and/or if you have certain types of neighbors.  If you are outside of city limits, a commercial kitchen would still be a whole different ball-game as you would have to get it licensed, be subject to inspections, and such as that, but counties don't have the same zoning authority, so you could do whatever you want with setting up the kitchen wherever, so long as the kitchen facility it-self meets health code.  

Now, on to another matter people have brought up, sales tax! Please read http://aixtcp.cpa.state.tx.us/opendocs/open32/201109242l.html as it spells a lot of the important details pretty well, and check with the Texas Comptroller of Public Accounts for more details.  However, basically, if you are selling only tax exempt items (items you would not pay sales tax on when buying from the grocery store), such as loaves of bread, you're fine and don't really need to worry about sales tax.  If you start getting into pastries, you need to make sure you don't serve them with utensils or you will have to be paying sales tax to the state on those sales, even if you aren't passing the sales tax along to your customers as an additional charge.  Also, if you get into some of the other items allowed under the cottage food law (especially items like candy), you need to check each item and see if it is sales tax exempt or not, because while loaves of bread are, my understanding is that candy is not.

Now, all of that said, let me also state I am NOT a lawyer, NOT a health expert, NOT a tax expert or professional, ... I'm just a fellow Texas baker who's already looked into a lot of these same questions because I've been looking at setting up a plan to sell at a local farmer's market.

I too live in Texas and have read about the cottage law etc. I think there are enough Millenials here to appeal to with healthy/organic breads etc... the thing is there's no bakeries besides the ones inside Walmart and Tom Thumb anywhere nearby so no "apprenticeship" and there's also no local colleges or schools that have any culinary classes at all whatsoever! I want to bake healthy/organic, sourdough, artisan, as well as some novelty breads and work my way up to a small bakery but don't know how to transition from two loaves to 20 (more or less)....any tips?